What are great Midwest Markets for my first Rental?

[Nick Wilson]

Hello,

I'm looking to buy my first 2 rental houses buy the end of 2019.  I currently live in Sacramento, CA and have about $200 of Equity in my current home to pull from.  I'm looking at buying a 3/1 or 3/2 Single Family Home at about the 40-60K range.  My primary goal is positive cashflow, and I'm not as concerned with appreciation.  I'm starting my research and due diligence into what markets are good.  I'm looking at property prices, eviction laws, property taxes, construction costs, job markets, and average rent.  I'll like to start buying properties in a general area until I build up around 10.  I travel to the East Coast 3-4 times a year for work, so I can spend a day or two visiting my properties each year and my plan is to walk the properties with a property manager.  I currently am brand new at RE Investing, and have no team in place.  Eager for feedback and ideas!

Thank you!

Nick

[James Wise]

Originally posted by @Nick Wilson:

Hello,

I'm looking to buy my first 2 rental houses buy the end of 2019.  I currently live in Sacramento, CA and have about $200 of Equity in my current home to pull from.  I'm looking at buying a 3/1 or 3/2 Single Family Home at about the 40-60K range.  My primary goal is positive cashflow, and I'm not as concerned with appreciation.  I'm starting my research and due diligence into what markets are good.  I'm looking at property prices, eviction laws, property taxes, construction costs, job markets, and average rent.  I'll like to start buying properties in a general area until I build up around 10.  I travel to the East Coast 3-4 times a year for work, so I can spend a day or two visiting my properties each year and my plan is to walk the properties with a property manager.  I currently am brand new at RE Investing, and have no team in place.  Eager for feedback and ideas!

Thank you!

Nick

 Hey Nick you aren't alone in your situation. Many investors are in the same boat. Luckily there are tons of turnkey markets out there. Many are well represented by sellers & turnkey operators here on BiggerPockets. The most popular markets are

• Cleveland
• Toledo
• Memphis
• Birmingham
• KC
• Indy
• Detroit

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.